Digitalization, E-Commerce, and Private Sector Development in Arab States

MENA countries display serious weaknesses in their ability to benefit from the adoption of digital trade and e-commerce. As these countries trade primarily in fossil fuel and other natural resources, they are less affected by the advantages of digital trade. MENA countries are poorly integrated in global value chains as they produce few intermediate products that they export to other countries. While consumers are adopting digital commerce quickly, the productive sector is not keeping pace. This has the implication of haemorrhaging consumers’ surplus for the benefit of sellers overseas. There are some exceptions where the opportunities such as in transport and tourism where digital trade have had a positive impact on local economies. Overall, the indications to date that the extent to which digitalisation will have a positive impact on the economies in the region will be limited to a small list of economic activities and confined to a small set of countries, mostly the GCC countries